According to NPR, housing experts expect 2015 to be mostly positive on the home-buying front, though there is one cause for concern.
The news source says that, thanks to lower unemployment rates, lower housing prices, higher rents and an entire generation (millennials) ready to move out of their parents’ homes, the housing market is looking good.
But one thing to watch out for is that this could finally be the year that mortgage interest rates rise.
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Rates are currently at an all time low, but most homeowners do not even apply to refinance their home.
Close to 20% of homeowners pay interest rates of 8% or higher. This is double the current rate.
Millions could save a lot of money by refinancing now.
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“Your home can be used to give your retirement savings a quick and significant boost. But each of these ways of tapping your home equity also comes with potential pitfalls. Here’s how your home can help you to pay for retirement.
Pay off your mortgage. Owing a home mortgage-free eliminates one of your biggest monthly bills. While you will still have to pay taxes, insurance and maintenance costs, people who pay off their homes by retirement no longer need to make mortgage payments or pay rent. Paying off your home makes it much easier to live on a limited budget…”
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On Tuesday, Congress elected to extend several expired “temporary” tax breaks for 2014, and included in there are a couple of deductions for select homeowners.
First, homeowners paying mortgage insurance premiums will be able to deduct he cost of the their premiums if they itemize their deductions. And anyone who has foreclosed on a home or sold their home for less than the amount still owed to the bank and had their remaining debt forgiven, the IRS will allow you to exclude that amount from your income.
The bill is now in the hands of President Barack Obama, and according to CNN Money, he is expected to sign it.
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In a new report by the Washington Post, it has been found that many millennials could afford to buy a home right now – just not in the cities where they currently live.
Many young people tend to gravitate toward certain cities, like San Francisco, New York and Austin. The bad news, though, is that those are among the 10 least affordable cities in the United States.
If they want to buy, millennials should look instead at Akron, Ohio; Dayton, Ohio; Rochester, N.Y.; Birmingham, Ala.; Indianapolis, Ind.; Detroit; Little Rock, Ark.; Gary, Ind.; Cleveland, Ohio; and Kansas City.
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Although the government has once again been pushing for home ownership as the best way for individuals to build wealth, financial experts are quick to caution against it.
“It would perhaps be smarter, if wealth accumulation is your goal, to rent and put money in the stock market, which has historically shown much higher returns than the housing market,” Nobel Prize-winning economist Robert Shiller revealed at a Standard and Poor’s conference last week.
For one thing, home ownerships comes with a whole hosts of additional costs – like property taxes, insurance, maintenance, etc. – that doesn’t exist in the stock market.
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As the job market continues to improve and first-time homebuyers make their way back into the house hunt, 2015 is expected to see a significant improvement in home sales nationwide.
Taking several data points into consideration, including population growth, affordability and employment, Realtor.com has targeted the 10 most promising housing markets for next year and beyond.
Making the list are Atlanta; Dallas; Des Moines, Iowa; Denver; Houston; Los Angeles; Minneapolis; Phoenix; San Jose, Calif.; and Washington, D.C.
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According to a new report by the Washington Post, it’s important to research school districts in your area when buying a home, regardless of whether you have children.
On average, homes in areas with good quality school districts cost approximately $50 more per square foot than homes that fall elsewhere.
In one extreme example given by the Post, two statistically similar homes located less that a mile apart in Alexandria, Va., were priced at $790,000 and $920,000 – a difference of $130,000 because of the respective school districts they fell into.
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When considering a move to a smaller property, experts suggest looking for a place that comes with a price tag you can afford to pay off without having to take out a new mortgage.
For one, most retirees live off of Social Security, savings accounts and other minimal funds.
Plus, says Thomas Scanlon, an adviser with Raymond James in Manchester, Conn., “If someone is 50 years old, he’d have the mortgage until he’s 80.”
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As you begin to discuss your downsizing options, you may throw around the idea of maintaining two smaller homes: one in your current locale and one in a place with a more temperate winter climate.
But experts recommend weighing the financial obligations of this idea very carefully before diving in.
“My own experience owning a house is that everything costs more than anticipated beforehand,” said Larry Luxenberg, managing partner with Lexington Avenue Capital Management, a financial advisory firm in New City, N.Y.
Plus, with gas prices always in flux, you need to keep in mind the cost of traveling back and forth between two homes on a semi-regular basis.
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